Does the Policy Lending of the Government Financial Institution Mitigate the Credit Crunch? Evidence from the Loan Level Data in Japan
Masahiro Sekino and
ESRI Discussion paper series from Economic and Social Research Institute (ESRI)
Using the contract level data, we find that the lending by Japan Finance Corporation for Small and Medium Enterprise (JASME), a state owned lending institution, mitigated a firm’s loss of borrowing from its main bank during the credit crunch. We further find that the JASME’s lending instrumented by the main bank’s lending supply growth as explained by the bank’s capital adequacy, which captures the lending to mitigate the loss of borrowing, had negative effects on the investment rate and that the JASME’s lending had an weak effect to mitigate the cash sensitivity of cash that captures the firm’s financial constraint.
Keywords: government financial institution; credit crunch; loan contracts JEL classification: G01; G21; G28 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:esj:esridp:342
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